The free ride is over: Get ready for mobile advertising overload in 2013

Smartphones and tablets are taking over. Web traffic from mobile devices is accounting for a larger piece of the pie with every passing month. It surpassed 10 percent this summer and it is growing so fast that analysts like Mary Meeker at Morgan Stanley are predicting that mobile will overtake desktop web traffic within the next few years. The speed with which smartphones and tablets have taken off has left advertisers in the dust. When mobile traffic hit 10 percent, it was still only accounting for 1 percent of online advertising spend (it has more than doubled since then). In other words, we’re living in the golden age of mobile technology where we can bask in its glory before it gets flooded with advertising.

According to research from Informa Telecoms and Media the mobile advertising market will have generated around $8 billion in revenue worldwide by the end of 2012. They are predicting it will hit $12.8 billion in 2013. They’re not the only ones. The marketing community is awash with predictions of great things in the coming year. They seem confident that mobile ad spend will soar as companies offer better advertising solutions. The U.S. alone will see over $4.4 billion spent on mobile ads in 2013 according to eMarketer.

The buzz is about video ads, native ads that run in apps like Facebook, accurate targeting of demographics, and brand integration with apps. We’re not talking about slapping a few banner ads into your favorite game here. The trick is to find ways to boost that conversion rate and get consumers engaging with ads, but it’s easier said than done.

Better ads and app integration

As our devices offer better connectivity, and Wi-Fi and LTE networks make video streaming more plausible, we’ll see more video ads being served to mobiles.

Many companies and brands are also now starting to realize the importance of in-app advertising. Twitter and Facebook, especially, are offering advertisers a route to that smartphone screen. Social media in general is clamoring to monetize all that mobile traffic, and new ad products are hitting the market at a steady rate now. We can expect to see an increase in mobile advertising on our social media platforms.

Another popular option is for a company or brand to develop an app, or have one developed for them. The same essence of content marketing must apply for this strategy to work; you need to offer something of value for the consumer to entice them to expose themselves to your advertising, which should be subtle. For instance, several developers out there produce branded augmented-reality apps that enable people to point their devices at traditional print ads or billboards and activate 3D animations.

Information collection

Google is the most successful online advertising company. According to eMarketer, it accounts for over half of mobile ad revenues in the U.S. thanks to a healthy lead in the search ad market. It is popularly assumed that much of its success derives from the huge amounts of data it is able to collect about people using it services.

Everyone wants to collect data about you. If companies develop their own apps, you can bet they’ll use them to harvest information as well. In theory, all that data can be used to target ads more accurately and to increase their effectiveness. It’s a fine line, though.

We can expect more clashes and privacy fears as companies seek to monetize the data you voluntarily give them in return for free services. Instagram just back tracked on a policy that could have allowed it to use your photos in advertising after there was a major uproar from users. Finding ways to generate mobile advertising revenue via popular apps is not straightforward. If the user experience is devalued enough, people could switch allegiance quickly. Facebook and the rest have to work out where the line is. How much advertising will you accept before you just stop using it?

Location tracking

The excitement about mobile advertising centers on the idea that we can be tracked and our actions can be recorded. We have a device that is capable of compiling a huge amount of detailed information about our habits. Marketers just want to serve us ads that will make us buy things. If they can find a way to create an ad that is personalized, that speaks to us directly, quite literally, then they will do it. The problem for them is that most of us have no desire to allow our mobile devices to inform advertisers where we are and what we are doing, just so a billboard can speak to us.

Yet we will use services like Google Maps, which can learn where we have been and crunch that info with the keywords in our emails or documents (assuming we use Gmail and Google Docs) to guess what we might be interested in, and when, and where.

Haven’t we heard this all before?

The predictions being made in marketing circles are nothing new. What do all the people predicting a major boost for mobile advertising in 2013 have in common? They all have a vested interest in it taking off. Traditional web advertising is already in decline thanks to the social media explosion. It stands to reason that mobile is the future, but it doesn’t automatically follow that you should throw all your advertising dollars at it now. That breakthrough ad product in mobile is still on the horizon, but as more people use mobile technology, you can bet companies will spend more on mobile ads.

The bottom line for us is a better quality of ad, more personalization, and a greater volume of ads invading our favorite apps and services on mobile. It remains to be seen whether the marketer’s dream of hooking into our mobile technology can be fully realized, because we will have to be complicit for it to truly work.